Tribunal allows Cenvat credit on service tax paid to Del Credere agents pre-2006, Revenue appeal dismissed.

The Tribunal allowed the appeal by the assessee, confirming the eligibility of Cenvat credit on service tax paid to Del Credere agents and setting aside the denial of credit on invoices issued prior to 01.03.2006. The Revenue's appeal was rejected.

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Issues Involved:
1. Eligibility of Cenvat credit on service tax paid on commissions to Del Credere agents.
2. Correctness of availing Cenvat credit on input service invoices issued by the office as ISD prior to 01.03.2006, when the registered address was different.

Issue-wise Detailed Analysis:

1. Eligibility of Cenvat credit on service tax paid on commissions to Del Credere agents:

The appellant, M/s. Reliance Industries Ltd., availed Cenvat credit on service tax paid on commissions to Del Credere agents, which was contested by the Revenue. The agents were appointed to promote the sale of products and were responsible for collecting payments from customers, guaranteeing payment in case of default. The primary function of these agents was sales promotion, with the collection of payments being incidental.

The relevant clauses of the agency agreement were scrutinized:
- Clause 3: Agents promote the sale of products.
- Clause 7: Agents collect payments from customers.
- Clause 8: Agents indemnify the appellant against defaulted payments.
- Clause 10: Agents provide market and financial information.

The Tribunal concluded that the agents' services were primarily for sales promotion, falling within the scope of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004. The definition of 'Business Auxiliary Service' includes commission agents, who may guarantee payment, thus supporting the appellant's claim. The Tribunal referenced the case of Essar Steel India Ltd. vs. CCE and Lanco Industries Ltd. vs. CCE, which upheld that commissions paid to agents for sales promotion qualify as input services.

2. Correctness of availing Cenvat credit on input service invoices issued by the office as ISD prior to 01.03.2006, when the registered address was different:

The appellant initially registered their office at Shantikunj, Ahmedabad, as an ISD. Later, the business operations shifted to Satellite office, and the address change was requested and allowed from 1st March 2006. The Commissioner denied credit on input invoices issued before this date, arguing the Satellite office was not registered as an ISD.

The Tribunal found this denial unsustainable, citing the Gujarat High Court's judgment in CCE vs. Dashion Ltd., which held that non-registration as an ISD does not automatically disqualify credit. The Tribunal emphasized that procedural irregularities should not lead to denial of substantive benefits when full records are maintained and verifiable.

Conclusion:

The Tribunal allowed the appeal by the assessee, confirming the eligibility of Cenvat credit on service tax paid to Del Credere agents and setting aside the denial of credit on invoices issued prior to 01.03.2006. The Revenue's appeal was rejected. The order was pronounced in open court on 21.06.2019.

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